FUTURE PHONE? THE PCN IS A WIRELESS TO WATCH
Pity the mail handlers at the Federal Communications Commission. When the agency asked for ideas last year on how to promote and regulate new wireless phone services, more than 3,000 pages of comments poured in from everywhere from Silicon Valley to Sweden. The intense interest reflected the huge potential of new wireless technologies, especially one called the personal communications network (PCN). Impulse Telecommunications Corp., a Dallas-based market researcher, estimates that by the year 2000, PCNs will bring in $2.78 billion annually--about what cellular phone systems bring in today.
Even though PCNs are at the experimental stage, proponents say they could eventually render the wired local phone monopolies passe. At minimum, they'll be one of many forces acting to loosen the grip of local phone companies on their customers. But before they take on the establishment, the upstart PCN systems must overcome technical, financial, and regulatory hurdles.
As envisioned by their proponents, PCNs would have light, inexpensive handsets that would communicate via low-power antennas. Subscribers would be able to make and receive calls while traveling, as they can with cellular phone systems, but at a lower price. Eventually, so many people would use PCNs that most calls would never have to travel over the wires of the local phone company.
CABLE ASSIST. That's a costly vision. To carry as much traffic as their business plans call for, PCN startups may need to erect a dozen antennas to cover the same area that a cellular system now serves with one. That means an enormous up-front investment. Indeed, companies experimenting with PCNs are already seeking ways to hold down expenses--perhaps by piggybacking on cable TV networks or creating networks only in certain areas, such as within large office buildings.
Finding a market niche for PCNs will be a challenge, too. Cellular is already well entrenched. And a cordless phone service known as CT-2 does some of what PCNs promise, but at a substantially lower cost. Already used in England, CT-2 lets customers make--but not receive--calls while in the vicinity of special transmitters.
And regulation is yet another hurdle. The FCC hasn't decided how--or whether--to make room on the precious airwaves for a service that overlaps existing ones. To ease its way with the commission, New York-based Millicom Inc. is testing a PCN setup in Houston and Orlando that works on part of the spectrum already used by microwave communications.
Even PCN entrepreneurs concede that they have a long struggle ahead. "It's not a shoo-in, and we're going to have to learn things about it," says Millicom CEO J. Shelby Bryan. Still, even if they don't match the cellular-phone revolution, PCNs are likely to be one more factor in the demise of the local phone monopolies.Mark Lewyn in Washington and Peter Coy in New York